Baltimore Coin Show Report

The Baltimore coin show opened to the public on Thursday and to the public on Friday. Thursday was one of the more active days at a coin show that I can remember. I had a steady stream of dealers looking through my coins and made a number of sales, including some to other dealers that I have not done business with in a number of years. Areas that seemed most active with dealers included early gold, New Orleans half eagles and eagles and Indian Head eagles.

Has anyone else noticed that Indian Head eagles in MS63 to MS65 grades have dramatically increased in price in the past two months? A little birdie at the coin show told me that prices in this series could see even more dramatic price increases in the next three to six months.

Public attendance on Friday was excellent. The size of the bourse floor was much bigger than in past versions of this show and, at times, it felt like being at a cavernous ANA or FUN convention. I met a number of new collectors including one gentleman who had just spent over $1 million at the ANR sale and appeared to be buying at a furious pace from dealers. Clearly, coins have reached a new level of popularity.

Both PCGS and NGC “made” more coins that at recent shows. I was pleased with most of my grading results and other dealers I spoke with felt both services were making a better effort to grade according to market standards than at other recent major shows. Because of this fact, it was possible to buy a few interesting coins. But it was clearly a grind to buy and I generally was able to purchase just one or two interesting pieces at a time.

Overall, I would grade this show an A- for Douglas Winter Numismatics and a B for most other dealers. It was a great show for selling and it turned out to be a bit better for buying than I expected. After the uneventful February Long Beach, the coin market got a nice little shot in the arm and seems to be in good health as we approach the Spring.

Coming up in April are two important shows: the Spring ANA in Atlanta and the Central States in Columbus. The sale of the Duke’s Creek collection of Dahlonega gold coinage is going to be a major test for the high end of the Southern gold market while the repercussions of the State of Ohio Coin Scandal should make this year’s edition of the CSNS interesting to say the least.

Virtues of Coin Clubs

I did something fun last night. I was asked to speak in front of a local coin club. Randy Clark, the President of the South King County Coin Club, asked me to make a presentation to his group. The meeting was held at the Tukwila Convention Center which is a few miles south of Sea-Tac airport. The facility is extremely nice and I was encouraged when Randy told me that the meeting usually attracted thirty to forty collectors. With very cold weather and impending snow on the horizon, the actual number of attendees turned out to be less. I counted around twenty people in the crowd; not including my wife who I dragged along for moral support and who I figured could be a ringer in case no one in the crowd had any questions. (Mary: “So what are some of the most interesting coins you’ve sold…”)

The meeting turned out to be a success. It lasted for close to two hours and I was encouraged that the crowd was knowledgeable and enthusiastic. While very few people in the club collected United States gold coins, they asked me some really interesting questions about grading, the price of gold and silver, toning, the market acceptability of “conservation” and more.

Coin clubs are an excellent place for new collectors to share knowledge and improve their education. As a national dealer I often forget about the grass roots of numismatics and that not everyone is necessarily interested in buying Condition Census New Orleans coins. Most collectors start small and as they become more confident because their knowledge is increasing, they buy more expensive coins.

If you are a new collector, go to a local coin club meeting and see if you like it. If you are an experienced collector or dealer, give a little of your time once or twice a year and help the local club. It’s a win-win situation for everyone.

"Fundamental" vs. "Grade" Rarity

When discussing “rarity” it is important to realize that there are two different types of rarity. These are “fundamental rarity” and “grade rarity.” Fundamental rarity refers to the overall rarity of an issue. A coin like a 1796 No Stars quarter eagle is fundamentally rare in any grade. The value of such a coin is due primarily to its rarity and not its grade. There is a high level of demand for this issue, even in very low grades. If you have a 1796 No Stars quarter eagle that looks like it was run over by a train, someone is still going to buy it.

A coin that is a grade rarity is one that is considered rare solely because of its high grade. A classic example of this is a 1920 Saint Gaudens double eagle. This is a common issue in the lower Uncirculated grades and it is only moderately scarce and desirable in MS63 to MS64. But it is extremely rare in MS65 and there is a dramatic jump in price between MS64 and MS65.

From my personal viewpoint, I like coins that are fundamental rarities. As someone who has a significant amount of money invested in coins (i.e., my inventory) I feel a lot better buying a coin that is considered desirable by virtue of its rarity in any grade than one that is desirable ONLY because of its high grade.

Some coins are “hybrids” which can be considered both fundamental rarities and condition rarities. As an example, a Proof Barber quarter is a relatively scarce coin with most issues having mintages figures below 1,000. Even an Impaired Proof has a degree of collector value. But at what point in the grading continuum does a Proof Barber Quarter morph from a fundamental rarity to a condition rarity? I’m not certain that I know the answer but I do know that once Proofs of this design are graded PR67 or higher, they become less interesting to me.

Another factor to consider is this. What if third-party grading ended tomorrow and slabs no longer had any relevance? In this scenario, a coin like an 1854-D Three Dollar gold piece would still be considered a desirable numismatic item with many potential buyers. But would a PR68 Barber quarter be considered four or five times “better” than a pretty, lightly hairlined piece that had previously been in a PR64 slab? I’m not sure I know the answer but…

These are interesting questions that the collector needs to ponder as he decides what his next purchase will be.

Modern Coin Epiphany

I’ve recently had a bit of an epiphany regarding modern coins. For someone who has traditionally snickered at Walking Liberty half dollars and Mercury Dimes because they were “too new” this isn’t totally unlike the President of Coke admitting that a Pepsi tastes pretty good with a Cheeseburger. Now don’t get to thinking that I really “like” modern coins because I don’t. But the more I look at people collecting moderns, the more I can appreciate the coins and respect the collectors.

I hear “old school” dealers registering the same complaints about modern coins: they are ugly…they are overpriced…they are unsophisticated…the market favors sellers. Let’s look at these points.

Looks: While I personally have a hard time getting excited about the design of a $50 Platinum eagle or a modern commemorative half dollar, I can understand that some people like they way they look. Hey, I love Abstract Expressionist art and a lot of people think it looks like squiggles on a canvas that a cranky three year old drew before his afternoon nap. And, to be honest about it, is a Chain Cent or a Capped Bust Right half dollar a really “beautiful” coin from an aesthetic point of view?

Prices: I think modern coins in super-grades are marginal deals but, you know what, so are many classic issues. If someone told me that they were spending $35,000 on a common date Barber Quarter in Proof-69, I’d suggest that they might be better off spending $5,000 on the same issue in PR67. I feel the same way about modern coins. A modern commemorative half eagle in MS70 at $5,000 is questionable value. The same coin in MS68 at $500 seems like a nice addition to someone’s collection.

Sophistication: From my perspective, I think a Bust Half dollar in AU at $500 is a more interesting, sophisticated coin than a Statue of Liberty $5 commemorative. But this is just my opinion. As “sophisticated” as I think my own tastes are, there are plenty of collectors who would look down their noses at me and my “silly southern gold coins” because they are not as worldly as their Roman Imperial coinage. Until the 1970’s, most Morgan dollar collectors were considered numis-morons and today these collectors are now in the upper echelon of collectordom.

Unfair Market: The modern coin market is a developing entity and it will take time for two-way markets to develop. At this point, EBay and Teletrade must be considered the largest modern coins dealers. No, they don’t offer the warm and fuzzy customer service that Douglas Winter Numismatics does, but most collectors of modern coinage don’t want this “frill.”

I can see modern coinage becoming a more and more viable part of the numismatic marketplace in the coming years. People will start researching these series and serious books will be written. In the meantime, why don’t we “classic coin lovers” and their “modern coin” counterparts just try to get along?

Prooflike Gold Coins

Are Prooflike gold coins an interesting future collecting trend or are they yet another piece of clever marketing hype? Yes and possibly yes. Business strike gold coins are usually frosty or satiny in texture. Occasionally, a group of coins are struck from newly-polished dies and they show reflective surfaces. Such coins are termed as “prooflike” by collectors. There are certain issues, such as gold dollars from the 1870’s and 1880’s and three dollar gold pieces from the same era that are frequently encountered with prooflike surfaces. This is due to the fact that these issues have low mintage figures and most were struck from fresh, new dies.

In the case where most examples of a specific date come prooflike, a coin designated as “prooflike” is, in my opinion, not interesting nor is it worth a premium. The one exception might be in the case where a coin has a very reflective or “deep mirror” surfaces.

Other issues are rarely seen with prooflike surfaces. As an example, a small number of New Orleans eagles from the 1840’s are found with very reflective surfaces.

In the case where only a fraction of examples of a certain date come prooflike, a coin designated as “prooflike” is, in my opinion worth a premium. It can be worth a significant premium if the prooflike surfaces add considerably to the coin’s overall eye appeal.

What about very common coins like 1904 double eagles that are sometimes seen with Prooflike surfaces? In my opinion, if a 1904 double eagle is slightly prooflike or reflective only on one side it is worth no premium. If the coin is very reflective and actually resembles a Proof, then it is worth a premium. This begs the question: exactly how much of a premium? At this point it is hard to say. No one really knows how rare Prooflike coins are, on a relative and absolute basis. As the grading services collect more data from submissions of prooflike gold coins, perhaps it will be possible to know the answer.

My advice on Prooflike gold is to go ahead and buy pieces with very reflective mirror surfaces but just don’t get caught up and pay huge premiums in a market for which value levels are still highly speculative.

Gold Coin Coloration

Why don’t gold coins with great coloration sell for a significant premium as copper, silver and nickel coins with a similar appearance do? On certain types of gold coins, superb natural coloration can sometimes be seen. As an example, some of the high grade gold dollars from the 1870’s and the 1880’s can be found with magnificent rose, orange and green-gold hues. Proof silver type coins from this era with wonderful color traditionally sell for big premiums over pieces with average quality coloration.

I believe that there are a few possible answers to this question.

First of all, many insanely toned silver coins are often very common pieces which are given big premiums solely because of their color. Dramatic multi-colored toning might be the only reason that someone wants to buy an otherwise-mundane coin like a common Peace Dollar or a silver commemorative half dollar. Clever marketers were quick to see that this was the best way to turn a $50 coin into a $10,000 coin. If a big marketing company starting selling MS67 and MS68 gold dollars for a big premium because of their color, their thinking just might catch on with the mainstream.

The second reason has to do with the fact that toning on gold coins tends not to be as visually dramatic as on silver or copper coins. You don’t see gold coins with stunning rings of peripheral blues and reds. But the natural coloration of gold is warm and attractive and most uncleaned pieces are fairly pretty to begin with. In my opinion (and if you disagree please don’t send me an irate email…) the natural appearance of most silver and copper coins just isn’t as pretty as their gold brethren.

It seems to me that superbly toned gold coins are a great market play right now, especially if they can be obtained for just a small premium over “normal” examples. If and when PCGS and NGC start designating eye appeal on their holders (NGC has semi-embraced this concept with the star designation) it will be interesting to see if very pretty gold coins sell for very big premiums.

The Graying of the Coin Business

The coin business continues to grow but will there be any dynamic younger dealers left to service the next generation of new collectors? I am in my mid-40’s and I represent one of the last waves of coin dealers. If you go to any coin show, you’ll see plenty of dealers in the 40-60 year old range. But you’ll see virtually no coin dealers in their 20’s or early 30’s. This worries me. What sort of future does the coin business hold if there are no up-and-coming dealers?

The lack of young dealers means that this business will become more “self-serve” in the coming years. By this I mean that most collectors will have to purchase their coins through impersonal sources like EBay with little or no guidance from a trusted resource. For some people, this will be no problem; they do not need the guidance they get from a dealer. For others, they will never get the satisfaction that a good dealer-collector relationship can provide.

I think the lack of young dealers boils down to one major issue: the extreme expense it takes in starting and running a successful coin business in today’s market. When I opened my business in 1984, I had less than $50,000 in operating capital. Today, it takes a significant six-figure investment to run a coin business.

I would personally like to see organizations like the Professional Numismatist Guild (PNG) create mentoring programs that match young numismatists with dealers and foster an environment that encourages more young people to choose numismatics as a career. Some large firms like Heritage and NGC offer internships for college age numismatists that are a great introduction to the reality of numismatic as a career.

While I’m not sure that I’d like to be 25 years old again, I’d sure like to be well-positioned in a growing industry that has a future leadership void. Teach your son or daughter how to grade coins…you have a better chance of him becoming the next Jim Halperin than the next Tiger Woods!

San Francisco Gold Coinage

Having just returned from a nice long weekend in lovely San Francisco, I found myself often* asking the question “why doesn’t such a great town with such an indisputable numismatic history have a more active collecting base?” I can think of at least four reasons why San Francisco gold coins lag their fellow branch mints’ popularity.

No one has written a book on these coins. Without seeming too egotistical, I think that my books on Charlotte, Dahlonega, Carson City and New Orleans books have been real shots in the arm for each of these mints. If and when someone writes an accessible, concise book about San Francisco gold coins, this will remedy a century of neglect. I won’t be writing this book. Will anyone step up to the plate?

Unlike the Southern gold coinage, production of San Francisco issues dragged on for nearly a century and entailed denominations ranging from gold dollars to double eagles. There are simply too many coins for most collectors to keep track of and they come in too wide a range of size. If I were the Czar of San Francisco Gold Collecting, I would try to market these issues in three age brackets: the early years (pre-1880 issues), the middle years (1880-1906) and the late years (1908-1930).

Continuing on the same track as Reason #2, there are too many different types of San Francisco coins to get all-encompassing collections started. The individual who collects St. Gaudens double eagles is unlikely to collect gold dollars. This seems to be a case of “never the twain shall meet” and because of this, San Francisco gold coins continue to have small pockets of cult interest that never merge together to form bigger interest groups.

Despite not being very popular many San Francisco gold issues are already very highly priced. This makes it harder to market them as undervalued sleepers. In a related vein, many of the early issues are very rare in all grades. Very rare coins are hard to promote because they are hard to find in any quantity.

* = OK, so I’m exaggerating here. I actually didn’t think about business or coins at all the whole weekend but on the plane ride back the subject did come up once or twice…

Does Size Matter?

When it comes to collecting United States gold coins, does size matter? For better or worse, I’m afraid it does. Most new collectors of gold coins are immediately attracted to big coins, especially double eagles. The classic entry position for most collectors is to buy some gold bullion, then graduate to something semi-numismatic like a Krugerrand or a Maple Leaf then to St. Gaudens or Liberty Head double eagles. This has been a pattern that many companies have pushed through their marketing.

When someone is new to collecting and spending a few thousand dollars on a coin for the first time, it is difficult to understand the concept that intrinsic value has little bearing in the world of rare gold. But this is exactly the reason why most new collectors shudder when they think about spending $5,000 on a small coin like a gold dollar or a quarter eagle.

There is another factor at work that keeps values of smaller coins below their larger counterparts. As most well-heeled collectors approach middle-age (or beyond) their eyesight no longer allows them to carefully view a small coin. Paying $5,000 for a gold dollar that you can’t even see keeps the average 50-60 year old collector away from little coins.

But there is a loyal group of collectors who like little coins. Just like some dog owners prefer mixed breeds to pedigrees (after watching the Westminster Dog Show last night I just had to make a dog reference…) some collectors like little coins for exactly the reasons that others do not: they are irrestible little “rogues” that require a bit more work to love than their bigger brethren.

I think some of the best values in the market are in the smaller-sized denominations. There are many gold dollars and quarter eagles that are superb values (feel free to email me at dwn@ont.com and I’ll provide you with a list of ten undervalued gold dollars and quarter eagles) especially when compared to eagles and double eagles. I will continue to actively buy and sell these smaller denomination coins—as long as I can still see them!